Ask your candidates!
Residents of Clarington, Scugog and Uxbridge will be going to the polls on November 26th to elect a new Member of Parliament in a by-election that was necessary due to the resignation of Bev Oda on July 31st. One of the questions we will be asking the candidates is whether they will support an indexing of the Home Buyers Plan(HBP).
Under HBP anyone can withdraw money from their RRSP to help purchase or build a qualifying first home for themselves or for a disabled relative. Each year, the home buyer must pay back to their RRSP a portion of the withdrawn amount. Generally, the full amount must be repaid within 15 years.
The HBP makes home ownership more attainable. Money withdrawn through the HBP essentially serves as a repayable, zero-interest self-loan. This can reduce or eliminate the need for costly mortgage insurance and reduce the amount of interest paid to lenders.
Currently, the HBP's withdrawal limit is set at $25,000. Unfortunately, inflation erodes the plan's buying power, thus reducing the ability of Canadians to afford their first home. This wouldn't be an issue, however, if the HBP were indexed to the Consumer Price Index (CPI).
To put this into local context, the average selling price of a re-sale home in Durham Region is $336,000; therefore the $25,000 limit represents only 7.4% which would still require the home buyer to purchase mortgage insurance.
With each MLS® home sale resulting in spin off spending of approximately $42,350 (Atlus Group) making home ownership easier makes good economic sense.